Rahul Gandhi’s NYAY difficult to implement; Arvind Panagariya raises 3 key questions

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Published: March 29, 2019 12:03:26 PM

The minimum income guarantee scheme, NYAY, proposed by Congress is difficult to implement and poses serious challenges to the economy, said former NITI Aayog vice chairman.

NITI Aayog, Arvind Panagariya, Nyuntam Aay Yojana, fiscal challenge, india newsThe incentive compatibility, fairness and fiscal challenge are the three key concerns raised by the first vice chairman of NITI Aayog for two years from 2015 to 2017.

The minimum income guarantee scheme, NYAY, proposed by Congress is difficult to implement and poses serious challenges to the economy, said former NITI Aayog vice chairman. Not only it presents a ‘fiscal challenge’, it also comes with a ‘serious incentive problem’, Arvind Panagariya, the veteran economist told news agency PTI.

The incentive compatibility, fairness and fiscal challenge are the three key concerns raised by the first vice chairman of NITI Aayog for two years from 2015 to 2017.

Also read: 108 economists can’t be ignored: Oxfam disses CAs; says accountants don’t represent 93% labour force

On Tuesday, Congress president Rahul Gandhi had said that NYAY which assures up to Rs 72,000 a year or Rs 6,000 a month income to 20 per cent of India’s poorest families will be implemented if the party comes into power.

The direct benefit transfer is meant to be Rs 6,000 per month per family to 50 million families and it also guarantees an income of Rs 12,000 per month to these poor families, he noted.

“What happens if one family has an income of only Rs 4,000 and another Rs 8,000 per month? Will the former then receive Rs 8,000 and the latter Rs 4,000 per month? If so, why should anyone with income below 12,000 do any work at all since their incomes will be Rs 12,000 regardless of what they earn?” he also told PTI.

The scheme has a serious incentive problem, he said, adding if it’s about transferring 6,000 each month to poor families irrespective of the earned income, it’s difficult to provide for Rs 12,000 monthly to those earning below Rs 6,000.

“But let us set that problem aside. Can we scrape Rs 3.6 trillion per year (calculated at Rs 6,000 per family for 50 million households)? There is no chance. “It is 13 per cent of the proposed total central government expenditure in budget 2019-20,” he added.

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